Arvind Panagariya calls for tackling general legacy issues

Panagariya said that although the general reforms may not be necessary to achieve 8-9 per cent growth, they ought be to undertaken for "the good of people". Panagariya is scheduled to leave Niti Aayog on August 31 and will be succeeded by well-known economist Rajiv Kumar.

Outgoing Niti Aayog Vice-Chairman Arvind Panagariya made a strong case for reforms in bureaucracy, police and judiciary, saying these general legacy issues will have to be addressed for sustained growth in the long term. Panagariya said that although the general reforms may not be necessary to achieve 8-9 per cent growth, they ought be to undertaken for “the good of people”. “The whole civil services, judiciary, police, these are all long standing issues which need to be tackled. All of these don’t have to be solved to get 8-9 per cent growth, but in the longer run for the good of people, we do need reform in bureaucracy, police, judiciary,” he told PTI.

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Asked if his exit at this juncture will affect reforms, Panagariya said, “Reforms do not happen because of single individuals, certainly not one who is not on the top. Single individual does matter, but that is the person at the very top level. Who is the prime minister is ultimately determines course of the policy.”

Panagariya is scheduled to leave Niti Aayog on August 31 and will be succeeded by well-known economist Rajiv Kumar. About the unfinished agenda, Panagariya added: “Although in terms of reforms, we have made lots of progress, we need a set of reforms which would give impetus to the creation of high productive jobs.”

Noting that India has done very well in capital and skilled labour intensive industries, he said, “Unfortunately, these industries are not large job creators. It is the clothing industry, the footwear industry to some extent and electronics which create large jobs.” He underscored the need to step up in these industries to become top exporter and replace China. He also stressed that India needs to make progress on reforms in the electricity sector.

Panagariya pitched for re-looking at the Goods and Services Tax (GST) in the next 2-3 years. “We should reassess GST in 2-3 years, and see if we can compress these rates in revenue neutral rate to maybe in two rates,” he said, adding that having too many tax rates produces all kinds of inversion. “So, getting into two reasonable tax rate system might overcome some of these anomalies also.” The GST Council has fixed a four-tier structure for taxation of goods and services at 5, 12, 18 and 28 per cent.